Mexican Central Bank Buys $4.5 Billion Gold
Source: Forbes, Robert Lenzer (5/5/11)
"Mexico's gold buying should embolden investors in gold."
Mexico joins China, Russia, India, Thailand and other central banks worldwide to take a major position in gold bullion, even as the price was moving to record price levels of $1,577 an ounce.
Mexico's purchase of 100 tons of gold in February and March underscores the opinion at central banks that precious metals like gold must be used as a monetary reserve as a substitute for accumulating more dollars. Central banks last year became major buyers of gold, reversing their strategy of selling some of their gold reserves each year in the past. Hedge funds, endowments and family offices also piled in—making the gold story one of the major themes among sophisticated investors.
The report of Mexico's gold in the Financial Times of London this morning should embolden investors in gold. It should also be seen as a confidence-building indication in light of the report that billionaire George Soros has been selling his gold position.
The price of gold has retreated about 4% in recent trading sessions from $1,577–$1,510, just as silver prices have fallen 20% after an intense speculative run.